iPhone, AT&T revenue to highlight Apple's fiscal fourth quarter

Apple's results for the quarter ended September will include strong Mac and iPod sales, but the true stars of the show will be the iPhone and profit sharing with AT&T, according to new analyst reports from Bear Stearns and Piper Jaffray.

Bear Stearns: iPhone will be 'disruptive'

Lead analyst Andrew Neff's research note to investors on Monday observed that while the iPhone's deferred revenue sharing scheme was unlikely to have an immediate impact on Apple's bottom line, the expected strong performance of the device in the quarter and its potential creation of a new category of phone —a "personal digital lifestyle device" —could have far-reaching benefits for the Cupertino-based firm's bottom line.

The researcher noted that Apple's software-oriented approach let it both deliver a steady stream of upgrades that could enhance the phone's functionality over time and cater to a different class of user who might be less concerned with business e-mail than having access to content from home.

"With iPhone, it isn't just about having the photos and music with you, but the ability to see, manage and use them in a simple and direct way," Neff argued. "iPhone could address a broader share of the handset market, i.e., not just smartphones."

This could turn an expected boost to iPhone shipments this quarter into a signifcant realignment of the industry, especially as the emphasis shifts to the handset maker rather than the cellular service provider, he said. In tandem with predicted strong sales of iPods and Macs during the quarter, the results were considered proof by the analyst that Apple was establishing multiple stable pillars for its success.

"We believe the Apple story has improved and can now benefit from multiple engines of growth," Neff said.

Piper Jaffray: AT&T's revenue agreement the focus

At investment firm Piper Jaffray, the emphasis was less on the marketshare implications and more on the financial effect of sharing revenues with AT&T, according to a report Tuesday from senior analyst Gene Munster. Shareholders ought to expect a $10.6 million lift to Apple's revenue assuming that Apple has sold 1.05 million iPhones and collects $3 per month for every existing AT&T customer and $11 per month for every new convert from another provider.

Munster also took care to address fears that widespread unlocking would have a significant effect on the immediate quarter. Even if a material percentage of iPhones sold in September were sold to users looking to unlock the phone for other carriers, Apple would still collect the immediate hardware revenue and would only lose about $330,000 of the anticipated revenue this quarter if 5 percent of iPhones did not include AT&T subscriptions, particularly if future software updates prevented a surge in the hacking attempts.

"Ultimately, it is clear that the iPhone unlocking does not have a meaningful financial impact," the analyst noted. "But it has the potential to cut significantly into the revenue sharing income if iPhone unlocking becomes rampant. That said, we believe Apple is working to disable unlocked phones so that the problem does not become widespread."

This would also assume Apple collected a conservative average of 10 percent from each AT&T subscriber. The real percentage could be higher, Munster added.

Piper Jaffray's report also put the iPhone's sales into context. The new iMac and the back-to-school season could lead Apple to ship as many as 2.2 million Macs in the quarter, setting a new record for the company. iPod shipments were also liable to climb, though the September introduction of new iPods meant that most of the reward for Apple from the music players would only manifest itself during the holidays.

Apple was therefore at least in line with most expectations and often slightly ahead of the curve, Munster said, meriting the investment group's Outperform rating on the stock.